U.S. builders' confidence rises to highest point since June 2006

The National Association of Homebuilders reported Tuesday that its builders' confidence index has reached its highest point since June 2006.

The news is not exactly a sign that builders feel the country is on the verge of another boom. Indeed, the index reveals only a minority of U.S. builders see good market conditions for new home sales.

Any number greater than 50 signifies a majority of builders consider sales conditions to be good. The NAHB revealed Tuesday that the confidence index reached a level of 40.

That 40, however, is the result of five straight months of increase and is the highest level in six years.

"No one's saying it's 2006 again or 2004 again, but it feels like we've turned a corner," said Randall Lewis, executive vice president of the Upland-based Lewis Group of Cos.

The Lewis Group does business with several builders who have projects in the Inland Empire.

Lewis recently attended a grand opening for D.R. Horton's "Riverglen" neighborhood in Eastvale, he said. He also plans to attend Beazer Homes' "Harvest" development in Rancho Cucamonga this coming weekend.

Another company that works with Lewis Group, Van Daele Homes, is set to hold a grand opening for new homes in Fontana on the weekend of Sept. 29.

When attending these kinds of grand openings, Lewis said buyers and sellers seem more likely to close a deal than during recent years.

"You can just feel it with the customers walking through," he said. "You see more people walking in the models. You also see more people talking to the sales people."

As builders' confidence improves, Southern California home prices have also risen.

The improvements in builders' confidence, however, are also being reported over a background of high unemployment and considerable economic uncertainty.

The official unemployment rate, which doesn't include people who have been unable or too discouraged to seek work, is at 8.1 percent.

As if that's not bad enough, business owners and economists alike can only guess whether Congress will be able to reach a compromise to prevent the nation from falling off a "fiscal cliff" of automatic tax increases and spending cuts in 2013.

That said, Lewis is not alone in his view that U.S. housing markets may be on the rebound after some five years of weakness.

"We think things have turned around and this recovery is sustainable," said Patrick Newport, an economist with IHS Global Insight.

Newport predicted that increased confidence will provide for an increase in new-home construction over the next six months, but he does not expect a full recovery for housing until 2016.